Archive for September 13th, 2011
Obama Proposes Tax Increases To Pay For Jobs/Stimulus Spending–Videos
Posted on September 13, 2011. Filed under: Banking, Blogroll, Business, Communications, Economics, Fiscal Policy, Macroeconomics, Microeconomics, Monetary Policy, Money, Private Sector, Public Sector, Unemployment, Unions, Video, War, Wealth, Weapons, Wisdom | Tags: Barack Obama, budget deficit, Economic, Economic Stimulus, fiscal policy, Jobs Bill, John B. Taylor, Tax Increases, Tax Policy, The FairTax, TheFairTax, Unemployment Rate |
Pronk Pops Show 45:September 14, 2011
Pronk Pops Show 44:September 7, 2011
Pronk Pops Show 43:August 31, 2011
Pronk Pops Show 42:August 24, 2011
Pronk Pops Show 41:August 17, 2011
Listen To Pronk Pops Podcast or Download Shows 45-
Listen To Pronk Pops Podcast or Download Shows 41-44
Listen To Pronk Pops Podcast or Download Shows 38-40
Listen To Pronk Pops Podcast or Download Shows 34-37
Listen To Pronk Pops Podcast or Download Shows 30-33
Listen To Pronk Pops Podcast or Download Shows 27-29
Listen To Pronk Pops Podcast or Download Shows 22 (Part 2)-26
Listen To Pronk Pops Podcast or Download Shows 16-22 (Part 1)
Listen To Pronk Pops Podcast or Download Shows 10-15
Listen To Pronk Pops Podcast or Download Shows 1-9
President Barack Obama addresses Joint Session of Congress in House Chamber
Credit: Official White House Photo by Lawrence Jackson
“Government spending cannot create additional jobs. If the government provides the funds required by taxing the citizens or by borrowing from the public, it abolishes on the one hand as many jobs as it creates on the other.”
~Ludwig von Mises
In his speech to Congress on Sept. 8, President Barack Obama proposed a $447 billion job’s package consisting of tax decreases and new federal government stimulus spending.
The largest piece of Obama’s proposal is a $240 billion temporary, targeted and timely tax decrease in Social Security taxes for employees and employers of 3.1 percent each for 2012. Employees and employers would pay half of what they normally pay of 6.2 percent each or a total of 12.4 percent up to an income limit which will be $106,800 in 2012.
While this would certainly provide additional income for both workers and businesses to spend, save or invest, it would not directly help the unemployed who are more likely to quickly spend any additional income they receive. While the employed would have additional income, it is not clear whether most individuals would either consume or save this additional income.
In addition, both Social Security and Medicare are running deficits and this temporary tax decrease would make the Social Security deficit even worse for 2012. However, Obama’s plan does require that the loss in Social Security payroll tax revenues must be paid for by additional taxes.
Stanford University economist John B. Taylor argues against “temporary, targeted, and timely” fiscal stimulus packages in a Wall Street Journal editorial entitled “Why permanent tax cuts are the best stimulus, short-term fiscal policies fail to promote long-term growth.” Taylor wrote “According to the permanent-income theory of Milton Friedman, or the life-cycle theory of Franco Modigliani, temporary increases in income will not lead to significant increases in consumption. However, if increases are longer-term, as in the case of permanent tax cut, then consumption is increased, and by a significant amount.” Two examples of a “temporary, targeted and timely” fiscal stimulus plans are Obama’s first stimulus package of $787 billion and his second proposed jobs/stimulus/tax package of $447 billion.
Instead, Taylor argues for permanent, pervasive and predictable tax changes to stimulate the economy and create more jobs. The
FairTax is an example of a permanent, pervasive and predictable fiscal stimulus that would dramatically increase the real growth rate of the U.S. gross domestic product and reduce the unemployment rate.
According to the Americans for Fair Taxation website, “The FairTax plan is a comprehensive proposal that replaces all federal income and payroll based taxes with an integrated approach including a progressive national retail sales tax, a prebate to ensure no American pays federal taxes on spending up to the poverty level, dollar-for-dollar federal revenue neutrality, and, through companion legislation, the repeal of the 16th Amendment. It abolishes all federal personal and corporate income taxes, gift,
estate, capital gains, alternative minimum, Social Security, Medicare, and self-employment taxes and replaces them with one simple, visible, federal retail sales tax administered primarily by existing state sales tax authorities.”
Obama said “pass this bill” several times in his speech. The only problem is there was no proposed bill to pass. Once the proposed legislation makes it to Congress, it would need to be scored by the Congressional Budget Office (CBO) to determine the estimated
spending outlays and tax revenue collections by fiscal year over a 10-year time period.
Obama also stated in his speech that the massive jobs/stimulus package would be fully paid for. On Sept. 12, the Obama administration released some crucial details of how the package would be funded, namely by a huge tax increase of $467 billion.
The new tax increases would take effect in 2013 and would collect an estimated $467 billion in additional tax revenues over 10 years.
Obama’s budget director, Jack Lew, summarized the tax increases over 10 years including:
- $405 billion from limiting the itemized deductions for
charitable contributions and other deductions that can be taken by individuals making
over $200,000 a year and families making over $250,000; - $41 billion from reducing or eliminating tax credits and
allowances for oil and gas companies; - $18 billion from requiring fund managers to pay higher
taxes on certain income; - $3 billion from changing the depreciation of corporate jets
from five years to seven years.
The $405 billion tax increase for individuals and families comes from limiting deductions to 28 cents per dollar deducted and exemptions on individuals who earn more than $200,000 per year and families who earn more than $250,000.
The additional federal spending and higher tax bills are not likely to pass in the near future. Therefore, it is likely that not enough jobs would be created between now and the next election in 2012 to reduce the unemployment rate significantly. To just keep up with population growth and new entrants into the labor force, the U.S. economy needs to create a minimum of 100,000 jobs per month. To reduce the unemployment by .1 percent per month an additional 150,000 jobs per month needs to be created.
If Obama’s proposed bill were passed in the near future, preliminary estimates are it would create more than 50,000 jobs per month. The U.S. economy is currently creating significantly less than 50,000 jobs per month. As a result, even if the bill were passed, the official unemployment rate would remain at or above 9 percent for 43 months of the Obama administration. This is not the hope and change the American people were expecting from Obama in 2008.
Republicans are not expected to seriously consider Obama’s proposals until they receive Obama’s proposed legislation and the CBO scores it. Republicans are likely to oppose any new tax increases and additional stimulus spending increases. The U.S economy is on the brink of another recession with real GDP growth rates for the first half of 2011 of only .7 percent. Also, the federal budget is in deficit, where spending outlays exceed tax revenues by an estimated $1.64 trillion in fiscal year 2011
and about $1 trillion in fiscal year 2012. This is on top of deficits of $1.41 trillion for fiscal year 2009 and $1.29 billion in fiscal year 2010.
Obama proposed his stimulus spending package, now named the American Jobs Act, to distract the American people from his previous failed economic policies of temporary and targeted tax decreases and massive government spending that has resulted in the official unemployment rate being above 8 percent for his entire administration. Obama knows that the Republican controlled House of Representatives will never pass his proposed legislation which includes a huge tax increase combined with even more government spending when the economy is on the brink of another recession and running massive government deficits. The American Jobs Act is dead on arrival.
Obama in his speech said he will campaign all across the country for his American Jobs Act. When the Republicans pass their own bill, Obama will then blame the Republicans for the high unemployment rate because they did not pass his American Jobs Act.
While this may be smart politics, it is bad economics. With over 25 million Americans searching for a full time job, Obama
should have proposed a permanent, pervasive and predictable fiscal program such as the FairTax to reduce the unemployment rate and increase the growth rate of the U.S. economy..
“The essence of the interventionist policy is to take from one group to give to another. It is confiscation and distribution.”
~Ludwig von Mises
Obama’s Jobs Speech To Congress- Full Video
Shorter: President Obama’s Jobs Speech
Obama’s Job Speech In 35 Seconds
Sen. Rand Paul Responds To President Obama’s Jobs Speech – 09/08/11
Reaction to Obama Jobs (aka Stimulus) Speech
Obama’s job plan would raise taxes – Press TV News
O.co aka Overstock.com CEO Patrick Byrne Discussing President Obama’s Job Creation Plan
Would President Obama’s Plan Create ‘Right Kind’ of U.S. Jobs?
Irwin Stelzer on President Obama’s Job Plan
Hartmann: New Deal trumps Raw Deal
President Obama Presents American Jobs Act (Enhanced Version)
What is the FairTax legislation?
Is the FairTax truly progressive?
Wouldn’t it be more fair to exempt food and medicine from the FairTax?
What will the transition be like from the income tax to the FairTax?
How does the FairTax impact savings?
Will the FairTax drive the economy down if people stop buying?
Background Articles and Videos
FICA Tax
John Taylor Receives the Bradley Prize — 2010
Epstein and Taylor: Are we all Keynesians now?
John Taylor’s Reason Versus Paul Krugman’s Hyperbole (Part 1 of 2)
John Taylor’s Reason Versus Paul Krugman’s Hyperbole (Part 2 of 2)
Steine Lecture Series with John B. Taylor
The Economy According to Taylor and Judd
Federal Insurance Contributions Act (FICA) tax
“…The Federal Insurance Contributions Act (FICA) tax ( /ˈfaɪkə/) is a United States payroll (or employment) tax[1] imposed by the federal government on both employees and employers to fund Social Security and Medicare[2]
—federal programs that provide benefits for retirees, the disabled, and children of deceased workers. Social Security benefits include old-age, survivors, and disability insurance (OASDI); Medicare provides hospital insurance benefits. The amount that one pays in payroll taxes throughout one’s working career is indirectly tied to the social security benefits annuity that one receives as a retiree.[citation needed] This has led some to claim that the payroll tax is not a tax because its collection is tied to a benefit.[3] The United States Supreme Court decided in Flemming v. Nestor (1960) that no one has an accrued property right to benefits from Social Security.
The Federal Insurance Contributions Act is currently codified at Title 26, Subtitle C, Chapter 21 of the United States Code.[4]
Overview
The Center on Budget and Policy Priorities states that three-quarters of taxpayers pay more in payroll taxes than they do in income taxes.[5] The FICA tax is considered a regressive tax on income (with no standard deduction or personal exemption deduction) and is imposed (for the years 2009 and 2010) only on the first $106,800 of gross wages. The tax is not imposed on investment income (such as interest and dividends).
“Regular” employees (most wage-earners)
For 2008, the employee’s share of the Social Security portion of the tax is 6.2%[6] of gross compensation up to a limit of $102,000 of compensation (resulting in a maximum of $6,324.00 in tax). For 2009 and 2010, the employee’s share is 6.2% of gross compensation up to a limit of $106,800 of compensation (resulting in a maximum Social Security tax of $6,621.60).[7] This limit, known as the Social Security Wage Base, goes up each year based on average national wages and, in general, at a faster rate than the Consumer Price Index (CPI-U). For the calendar year 2011, the employee’s share has been temporarily reduced to 4.2% of gross compensation, with a limit of $106,800.[8] The employee’s share of the Medicare portion is 1.45% of wages, with no
limit on the amount of wage subject to the Medicare tax.[6]
The employer is also liable for 6.2% Social Security and 1.45% Medicare taxes,[9] making the total Social Security tax 12.4% of wages, and the total Medicare tax 2.9%. (Self-employed people are responsible for the entire FICA percentage of 15.3% (= 12.4% + 2.9%), since they are in a sense both the employer and the employed; however, see the section on self-employed people for more details.)
If a worker starts a new job halfway through the year and has already earned the wage base limit for Social Security purposes, the new employer is not allowed to stop withholding until the wage base limit has been earned with the new employer. There are some limited cases, such as a successor-predecessor transfer, in which the payments that have already been withheld can be counted toward the year-to-date total.
If a worker has overpaid toward Social Security by having more than one job or by having switched jobs during the year, that worker can file a request to have that overpayment counted as tax paid when he or she files a Federal income tax return. If the taxpayer is due a refund, then the FICA overpayment is refunded.
Self-employed people
A tax similar to the FICA tax is imposed on the earnings of self-employed individuals, such as independent contractors and members of a partnership. This tax is imposed not by the Federal Insurance Contributions Act but instead by the Self-Employment Contributions Act of 1954, which is codified as Chapter 2 of Subtitle A of the Internal Revenue Code, 26 U.S.C. § 1401 through 26 U.S.C. § 1403 (the “SE Tax Act”). Under the SE Tax Act, self-employed people are responsible for the entire percentage of 15.3% (= 12.4% [Soc. Sec.] + 2.9% [Medicare]); however, the 15.3% multiplier is applied to 92.35% of the business’s net earnings from self-employment, rather than 100% of the gross earnings; the difference, 7.65%, is half of the 15.3%, and makes the calculation fair in comparison to that of regular (non-self-employed) employees. It does this by adjusting for the fact
that employees’ 7.65% share of their SE tax is multiplied against a number (their gross income) that does not include the putative
“employer’s half” of the self-employment tax. In other words, it makes the calculation fair because employees don’t get taxed on their employers’ contribution of the second half of FICA, therefore self-employed people shouldn’t get taxed on the second half of the self-employment tax. Similarly, self-employed people also deduct half of their self-employment tax (schedule SE) from their gross income on the way to arriving at their adjusted gross income (AGI). This levels the amount paid by self-employed persons in comparison to regular employees, who don’t pay general income tax on their employers’ contribution of the second half of FICA, just as they didn’t pay FICA tax on it either.[10][11]
These calculations are made on Schedule SE: Self-Employment Tax, although that is not readily apparent to novice self-employed taxpayers, owing to the schedule’s rather opaque name, which makes it sound like it is part of the general federal income tax. Some taxpayers have complained that Schedule SE’s title should be changed to something such as “Self-Employment FICA Tax”, so that its separateness from the general income tax is apparent,[12] perhaps not realizing that the SE tax is not imposed by the Federal Insurance Contributions Act (FICA) at all, and that neither SE taxes nor FICA taxes are “income taxes” imposed under Chapter 1 of the Internal Revenue Code.
Exemption for certain full-time students
A special case in FICA regulations includes exemptions for student workers. Students enrolled at least half-time in a university and working part-time for the same university are exempted from FICA payroll taxes, so long as their relationship with the university is primarily an educational one.[13] Medical residents working full-time are not considered students and are not exempt from FICA payroll taxes, according to a US Supreme Court ruling in 2011.[14] In order to be exempt from FICA payroll taxes, a student’s work must be “incident to” pursuit of a course of study, which is rarely the case with full-time employment.[14]
History
Prior to the Great Depression, the following presented difficulties for working-class Americans: [15]
- The U.S. had no federal-government-mandated retirement savings; consequently, for those people who had not voluntarily saved money throughout their working lives, the end of their work careers was the end of all income.
- Similarly, the U.S. had no federal-government-mandated disability income insurance to provide for citizens disabled by injuries (of any kind—non-work-related); consequently, for most people, a disabling injury meant no more income (since most people have little to no income except earned income from work).
- In addition, there was no federal-government-mandated disability income insurance to provide for people unable to ever work during their lives, such as anyone born with severe mental retardation.
- Further, the U.S. had no federal-government-mandated health insurance for the elderly; consequently, for many people, the end of their work careers was the end of their ability to pay for medical care.
- Finally, the U.S. had no federal-government-mandated health insurance for all those who are not elderly; consequently, many people, especially those with pre-existing conditions, have no ability to pay for medical care.
In the 1930s, the New Deal introduced Social Security to rectify the first three problems (retirement, injury-induced disability, or congenital disability). It introduced the FICA tax as the means to pay for Social Security.
In the 1960s, Medicare was introduced to rectify the fourth problem (health care for the elderly). The FICA tax was increased in order to pay for this expense.
Criticism
Social Security regressivity debate
The Social Security component of the FICA tax is regressive, meaning the effective tax rate regresses (decreases) as income increases.[16] The Social Security component is actually a flat tax for wage levels under the Social Security Wage Base (see “Regular” employees above). But since no tax is owed on wages above the Wage Base limit, the total tax rate declines as wages increase beyond that limit. In other words, for wage levels above the limit, the absolute dollar amount of tax owed remains constant; since this number (the numerator) remains constant while the wage level (the denominator) increases, the
effective tax rate steadily decreases as wage levels increase beyond the Wage Base limit.
FICA is also not collected on unearned income, including interest on savings deposits, stock dividends, and capital gains such as profits from the sale of stock or real estate. The proportion of total income which is exempt from FICA as “unearned income” tends to rise with higher income brackets.
Some argue that since Social Security taxes are eventually returned to taxpayers, with interest, in the form of Social Security benefits, the regressiveness of the tax is effectively negated.[citation needed] That is, the taxpayer gets back what he or she put into the Social Security system. Others, including the Congressional Budget Office, point out that the Social Security system as a whole is progressive;
individuals with lower lifetime average wages receive a larger benefit (as a percentage of their lifetime average wage income) than do individuals with higher lifetime average wages.[17][18] …”
http://en.wikipedia.org/wiki/Federal_Insurance_Contributions_Act_tax
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Posted on September 13, 2011. Filed under: American History, Banking, Blogroll, Business, College, Communications, Demographics, Economics, Education, Employment, Energy, Federal Government, Fiscal Policy, Foreign Policy, government, government spending, history, Inflation, Language, Law, liberty, Life, Links, media, Microeconomics, Monetary Policy, Money, People, Philosophy, Politics, Rants, Raves, Strategy, Talk Radio, Taxes, Technology, Unemployment, Video, War, Wealth, Weapons, Wisdom | Tags: Balanced Budgets, Big Government, CNN, conservatives, Executive Orders, government spending, Hermain Cain, illegal immigration, Jobs, Jon Huntsman, Leadership, Libertarians, Michele Bachmann, Mitt Romney, Newt Gingrich, Politics, Republican Debate 12 September 2011, Republican Debate 9/12/2011, Republicans, Rick Perry, Rick Santorium, Ron Paul, social security, Tax Reform, Taxes, Tea Party, The Tea Party Republican Debate CNN, unemployment |
Pronk Pops Show 45:September 14, 2011
Pronk Pops Show 44:September 7, 2011
Pronk Pops Show 43:August 31, 2011
Pronk Pops Show 42:August 24, 2011
Pronk Pops Show 41:August 17, 2011
Listen To Pronk Pops Podcast or Download Shows 45-
Listen To Pronk Pops Podcast or Download Shows 41-44
Listen To Pronk Pops Podcast or Download Shows 38-40
Listen To Pronk Pops Podcast or Download Shows 34-37
Listen To Pronk Pops Podcast or Download Shows 30-33
Listen To Pronk Pops Podcast or Download Shows 27-29
Listen To Pronk Pops Podcast or Download Shows 22 (Part 2)-26
Listen To Pronk Pops Podcast or Download Shows 16-22 (Part 1)
Listen To Pronk Pops Podcast or Download Shows 10-15
Listen To Pronk Pops Podcast or Download Shows 1-9
P1 The Tea Party Republican Debate CNN 9-12-2011
P2 The Tea Party Republican Debate CNN 9-12-2011
P3 The Tea Party Republican Debate CNN 9-12-2011
P4 The Tea Party Republican Debate CNN 9-12-2011
P5 The Tea Party Republican Debate CNN 9-12-2011
Tea Party Republican Debate Question #1: Social Security
Tea Party Republican Debate Question #2: How Do You Protect Seniors When So Much Goes To Defense?
Tea Party Republican Debate Question #3: What Would You Do To Get The Economy Moving Forward?
Tea Party Republican Debate Question #4: Can You Be Pro Business & Pro Worker?
Tea Party Republican Debate Question #5: Should The Federal Reserve Be Audited?
Tea Party Republican Debate Question #6: How Much Of My Pay Check Should I Be Allowed To Keep?
Tea Party Republican Debate Question #7: Executive Orders
Tea Party Republican Debate Question #8: What Is Your Plan To Reduce Healthcare Cost?
Tea Party Republican Debate Question #9: What Would You Do To Remove Illegal Immigrants?
Tea Party Republican Debate Question #10: Do You Plan To Decrease Defense Spending?
Tea Party Republican Debate Question #11: What Would You Bring To The White House?
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Posted on September 13, 2011. Filed under: American History, Banking, Blogroll, Business, College, Communications, Economics, Education, Employment, Federal Government, Fiscal Policy, Foreign Policy, government, government spending, Health Care, history, Language, Law, liberty, Life, Links, media, Microeconomics, Monetary Policy, Money, People, Philosophy, Politics, Rants, Raves, Security, Strategy, Talk Radio, Taxes, Technology, Unemployment, Video, War, Wealth, Weapons, Wisdom | Tags: Economics, Foreign Policy, Healthcare, Republican Debates, Ron Paul, Septemeber 12 2011, Welfare |
Ron Paul Highlights in 9/12/2011 Presidential Debate
Background Articles and Videos
SA@TheDC – Russell Kirk and 9/11
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